We also saw a spike in volatility in the market. The CBOE Volatility Index (VIX), often referred to as the “Fear Index,” surged higher. At the beginning of October, it stood at around 12. By the end of October, it had reached close to 29. This represents an increase of over 140% in a matter of a month.

At its core, in October, the VIX said that investors were nervous.

What’s Ahead?

Historically speaking, November and December tend to be good months for the stock market. Rarely, we see a sell-off in these months.

Look at the S&P 500, for example. Since 2009, there have been only two instances when the index declined in November (in 2010 and 2011), and two instances when the S&P 500 declined in December (in 2014 and 2015.) (Source: “S&P 500,” Morningstar, last accessed November 7, 2018.)

Mind you, for all these instances where the S&P 500 dropped, the declines were small.

So, it’s possible that stocks find some support in the coming months.

However, be very careful ahead.

Please look at the chart below. It plots the put/call ratio. This chart may not look exciting to the untrained eye, but it’s saying a lot about investor sentiment and where the stock market could be headed next. Look closely.

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Moe Zulfiqar joined Lombardi Financial as a research analyst and editor where he provides insight into current market conditions, trends, and where the next big opportunity will surface. Moe ...
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Moe Zulfiqar joined Lombardi Financial as a research analyst and editor where he provides insight into current market conditions, trends, and where the next big opportunity will surface. Moe analyzes macroeconomic conditions, but has a special interest in the basic materials, financial, and technology sectors.

Moe has a strong understanding of North American capital markets. A student of world finance and trading, he has extensive knowledge of both fundamental and technical analysis, and uses them to evaluate high-growth investment opportunities.

Moe is a graduate of the York University business program. He is an avid runner and has completed two half-marathons. In the past, Moe has participated in competitive football, wrestling, and rugby. He is an avid football fan, and his favorite team is the Dallas Cowboys.